Economic index falls 0.1% in June

WASHINGTON - US growth will slow in the second half of the year as unemployment rises and stock market declines erode household wealth, according to an index of leading economic indicators.

The Conference Board's measure, designed to predict the economy's performance over the next three to six months, fell 0.1 percent in June after a 0.2 percent drop in May.

Rising claims for unemployment insurance, falling equity prices, and a slide in consumer confidence contributed to the decline. The report reinforces evidence that the impact of federal tax rebates will fade in the second half as the housing slump, record fuel prices, and credit crunch force households to rein in spending.

"We're in a very strange period where we're teetering between negative and positive growth periods," said Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York. "We may be seeing weakness in coming quarters."

Treasuries were little changed after the report with the yield on the 10-year note at 4.06 percent in New York, compared with 4.09 percent at last week's close.

The decline in the New York-based research group's index in June matched the median estimate of 62 projections in a Bloomberg News survey of economists. The May reading was revised from the previous estimate of a 0.1 percent increase.

The measure has fallen 2.1 percent over the last 12 months, a decline not exceeded since September 2001, during the economy's last recession.

We're seeing "pretty significant declines in home prices," said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia. "Until we see some stability in that, there's little hope for consumer spending to improve substantially."

Six of the 10 indicators in yesterday's report subtracted from the index, led by a slump in the money supply.

An increase in jobless claims subtracted 0.17 percentage point from the leading economic indicators index. A decline in the average for the S&P 500 index took away 0.18 percentage point.